The Council of Australian Life Insurers (CALI) has pushed for action on tranche two of the Delivering Better Financial Outcomes (DBFO) reforms, voicing fears that further delays could have “generational impacts”.
Delays have become something of a feature of the government’s advice reforms, with promises to fix the “hot mess” now almost three years old.
Financial Services Minister Stephen Jones detailed the next package of reforms in Canberra in December 2023, yet close to a year later, advisers are still waiting to see draft legislation.
Even after the first DBFO legislation was passed through Parliament, Jones almost immediately signalled that the next round was further away than some in the advice sector might like.
The new timeline, Jones said, was simply the vague description that it would be “developed over the second half of the year”.
In August, Financial Advice Association Australia (FAAA) chief executive Sarah Abood said it felt like progress had “stalled” on tranche two, though did note the FAAA has had some informal meetings with Treasury.
“What we have been advised is that formal consultations are due to take place shortly, and the intent is that we will see legislation for tranche two. Originally, it was around the year, and that date’s been drifting a bit,” Abood said.
According to CALI CEO Christine Cupitt, continued delays on getting the reforms in place are hurting consumers.
“Without these reforms, millions of Australians and their families will be left behind in financial limbo,” Cupitt said.
“Doing nothing won’t just hurt today. It’ll set in motion a chain reaction over the next 10, 20 and even 30 years as many Australians remain priced-out of getting the right advice to secure their financial future and look after their loved ones.”
Pointing to research commissioned by CALI, she noted that the financial advice needs of Australians are not currently being met, adding that more than 40 per cent of Australians want advice that’s more personalised and helps them make a decision about how much cover they need and the products that are best suited to them.
Cupitt has previously made it clear that CALI wants insurers to be allowed to provide simple advice on their own products in order to bridge the advice gap.
Speaking before the Senate economics legislation committee in June, the CEO said the proposed reforms would “help expand Australians’ access to advice and back-in the vital work of financial advisers across the country”.
“As cost-of-living pressures rise, many people are now less certain about their financial situation. They know they need to manage their household balance sheet, and getting professional advice on their life insurance is an important part of that. But this can cost more than $3,000,” she said at the time.
Life insurers are currently unable to legally provide customers with simple advice when they ask for it and are restricted to providing general advice.
“Australians have made it clear. They want these changes, and they want them now more than ever,” Cupitt said.
“People need someone to talk to about their financial future. They’re already dealing with sustained cost-of-living pressures, we shouldn’t be turning our backs on them as they try to take care of their loved ones.”
She added that the current “advice accessibility crisis” is leaving Australians underinsured and unprotected.
“The barriers to getting advice remain far too high. Australia’s life insurers just want to be able to provide simple advice on their own products when people ask them to, at no extra cost to the customer,” Cupitt said.
Can’t beat self interest
Australian consumers certainly want affordable professional financial advice. But they don’t want “advice” from a product company. Product company “advice” is just a conflicted sales pitch.
Fixing the hot mess of bad regulation is the only way to improve access to professional financial advice. Stephen Jones has shown he is good at recognising problems, but incapable of fixing them. Unfortunately Albo has chosen to persist with Jones even though he has achieved next to nothing. It’s time for a change of government.
The AFCA Forum is on at the moment and we need to pause for a moment to understand where claims are being made and it is obvious that something must change about the delivery of advice. Delivering DBFO needs to happen sooner than later.
The Dixon claims highlight the need to ban advisers from promoting products which not at arm’s length. All too often we see advisers promoting their owners products to the determent of their clients.
The majority of financial advisers always provide good advice in their clients “Best Interests” and they also need the opportunity to provide Simple Advice where it is appropriate to bring down the costs of advice.
Meanwhile, back packers and former used car salesmen manning the phones at super funds continue to give lifr devestating advice to poor unsuspecting members
What is CALI supposed to be doing ?
Representing life insurer consumers
Or seeking more profit for its life insurance manufacter members
If so , go back to the FSC and join hands. You are making no difference
“As cost-of-living pressures rise, many people are now less certain about their financial situation. They know they need to manage their household balance sheet, and getting professional advice on their life insurance is an important part of that. But this can cost more than $3,000,” she said at the time.
What a statement of the bleeding obvious. The need for advice has been there for a decade or more.There is a reason why Life risk specialists are looking to charge fees for life risk advice.
It’s called LIF!
Those of us who are risk specialists and are still in the business HAVE to charge fees for advice just to keep the office door open and put food on OUR table. You can’t cut adviser revenue in a tough business by 50% and not expect to get a reaction from the people to whom you used to pay full commissions. Advisers have voted with their feet, with many buying old books and legitimately increasing sum insureds at 110%.
I’ve done the sums on new business under LIF: I reckon I should be charging for at least $2,500 minimumin advice fees and taking full commission for mum and dad clients, just to be able to afford to provide the advice and fight the ever increasing compliance demands that eminates from ASIC every day
All this would change if CALI found some kahunas, girded their loins, put pride in their back pocket and went to back to Treasury, and their surrogate, Minister Jones, to say the magic words “LIF has stuffed our industry.”
Gee, the subsequent increase in genuine life risk new business might actually force CALI members to reconsider Duration Based Pricing (a definite version of switch and bait) and the short term “stinkin thinkin” of “gouging” existing policyholders. Would that not be good for everyone?
Sadly CALI are just another lobby group for business
The answer, as apparently proposed by CALI, is to let their members loose in the world , flogging cheap and nasty and un-advised products, while pretending that a new capacity to sell those products direct is really NOT providing advice to an uneducated clientele
Cali, you can’t sell risk under guise of advice. Lift commission to pre LIF instead
It is clearly an unmitigated disgrace.
There is absolutely no valid reason for this amount of delay.
Australians deserve so much better than this.
Dear CALI, on the basis of the costs impeding advice.
It would then also make sense if people can’t afford to see a Dr, they just call a Drug Company and get direct sales advice and sent prescription drugs.
You Christine Cupitt only care about flogging more Life Ins products.
You Christine Cupitt have zero interest in Real Advice.